Lloyds Banking Group PLC on Wednesday maintained its annual net interest margin guidance and reported consensus-topping third-quarter profit, though top-line growth fell just shy of loftier expectations.

In the third quarter of 2023, the lender’s net income rose 0.7% on-year to £4.51 billion from £4.48 billion. This was below company-compiled consensus of £4.56 billion, however.

Net interest income alone was 1.5% higher at £3.44 billion, though this also fell short of consensus of £3.45 billion.

Pretax profit more than trebled to £1.86 billion from £576 million a year earlier, beating consensus of £1.82 billion.

Its banking net interest margin improved to 3.08% in the third quarter from 2.98% a year earlier, amid rising interest rates. It was shy of the 3.10% consensus and the 3.14% achieved in the second quarter of the year.

Underlying impairment charges were lower, amounting to £187 million compared to £668 million.

Excluding those impairment charges, underlying profit was 5.1% lower at £2.21 billion from £2.33 billion.

‘The group continues to perform well. Robust financial performance and strong capital generation in the first nine months of the year was driven by net income growth, cost discipline and resilient asset quality. This performance allows us to reaffirm our 2023 guidance,’ Chief Executive Charlie Nunn said.

Looking to the rest of 2023, Lloyds backed its aim of a banking net interest margin ‘greater than’ 3.10%. It would top the 2.94% achieved in 2022.

It now expects an asset quality ratio below 30 basis points. It had previously expected this to amount to around 30 basis points. The measure is a loan loss rate, so the lower the better.

Lloyds said deposits, loans and advances declined during the third quarter.

It explained: ‘Loans and advances to customers reduced £2.8 billion to £452.1 billion, including a £2.5 billion legacy portfolio exit in the first quarter. Balances increased by £1.4 billion in the third quarter with growth across a number of businesses.

‘Customer deposits of £470.3 billion down £5.0 billion (1.0%), including a £9.4 billion reduction in Retail current accounts, partly offset by a combined £5.2 billion increase in Retail savings and Wealth balances. Deposits increased by £0.5 billion during the third quarter, given growth in Retail savings.’

Lloyds Banking’s numbers followed a mixed set of results from Barclays PLC on Tuesday. Barclays had cut its UK net interest margin guidance, leading to investors fretting over the possibility of a similar disappointment at Lloyds and NatWest Group PLC, which reports on Friday.

Lloyds shares fell 2.0% on Tuesday. They gave back another 0.3% to 40.46 pence each in early dealings on Wednesday.

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